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ContractDate Posted: 2009-09-02 12:09:35
It has been stated that "the Contractor shall submit a financial guarantee for an amount equal to the estimated expenditures associated with the Work Programme of the Initial Exploration Period" in the Article 5.5 of the EPSC.
And we were told that for the unknown HC accumulation area if one well cost more than 10 million Dollar (for example 12 million or 8 million), it is going to be calculated as 1000 WU instead of 1200 WU or 800WU. Our question is about "the estimated expenditures associated with the Work Programme". We are still confused about does the "financial guarantee" should be submitted equal to 8 million $, 10 million $, or 12 million $ at the Initial Exploration Period?
And we were told that for the unknown HC accumulation area if one well cost more than 10 million Dollar (for example 12 million or 8 million), it is going to be calculated as 1000 WU instead of 1200 WU or 800WU. Our question is about "the estimated expenditures associated with the Work Programme". We are still confused about does the "financial guarantee" should be submitted equal to 8 million $, 10 million $, or 12 million $ at the Initial Exploration Period?
Answer
Date Answered: 2009-09-02 13:09:08
Article 6.1.e.i which deals with this matter has now been clarified as follows:
“[…] the Contractor shall provide security by means of a Financial Guarantee for Exploration Expenditures for one hundred per cent (100 %) of the commitment […] equal to the total unadjusted amount deemed to be required for Exploration Expenditures on a Work Unit equivalence basis estimated Exploration Expenditures for the Initial Exploration Period, or, as the case may be, for the First and Second Extension Periods […]. Such security shall be reduced at the end of each Contract Year in the Exploration Phase by the amount deemed to have been expended on Work Unit equivalence basis stipulated for expenditure in such Contract Year to the extent that the Contractor has performed the work commitments stipulated in Paragraph 6.1(d) for such Contract Year.
Therefore in your example, the financial guarantee should be US$10 million, regardless of the budgeted costs for drilling this well.
“[…] the Contractor shall provide security by means of a Financial Guarantee for Exploration Expenditures for one hundred per cent (100 %) of the commitment […] equal to the total unadjusted amount deemed to be required for Exploration Expenditures on a Work Unit equivalence basis estimated Exploration Expenditures for the Initial Exploration Period, or, as the case may be, for the First and Second Extension Periods […]. Such security shall be reduced at the end of each Contract Year in the Exploration Phase by the amount deemed to have been expended on Work Unit equivalence basis stipulated for expenditure in such Contract Year to the extent that the Contractor has performed the work commitments stipulated in Paragraph 6.1(d) for such Contract Year.
Therefore in your example, the financial guarantee should be US$10 million, regardless of the budgeted costs for drilling this well.